Ask the Professor on Mises and Today's "The Calling"

Steven HorwitzIt's a Horwitz two-fer today.1. Over at the Fraser Institute's "Ask the Professor" feature, my essay for this month is on Mises's Human Action and I'll be doing a live chat/Q&A at 2pm EDT at that same site. Feel free to join us. Here's an excerpt from that piece:From Mises’ understanding of the subjective nature of knowledge,
valuation, and choice, he attempted to build up a complete understanding
of economics in Human Action, from the basics of how prices
emerge from valuation and choice and monetary exchange to the business
cycle to the problems with various forms of government intervention and
the impossibility of socialist planning. In all of these cases, the
central insight was that the market was not a “place or a thing” but “a
process.” Markets, particularly the exchange of private property for
money, were a way in which humans attempted to improve their perceived
situations. Markets were not, as they were being more frequently
depicted in mainstream economics, simply places where consumers and
producers met to maximize utility and profits respectively based on
prices “given” to them. The market was not, for Mises, a maximization
machine; the market was a dynamic process of change, learning, and
growth. 2. This morning's Freeman Online column is titled "Two Structural Reasons Why Government Fails." It's the third part of the trilogy that began with "Neither Evil nor Incompetent" and "Conspiracy-Theory Socialism." A snippet:Together the knowledge and Public Choice problems provide the structural
critique of government that enables classical liberals to avoid the
pitfalls of assuming malevolence, incompetence, or grand conspiracy.
This structural critique is robust precisely because it applies even if
we assume politicians and bureaucrats are incredibly smart and
well-meaning.

|Peter Boettke|
In his 1922 book Socialism, Mises argued that in the stationary state of equilibrium there would be no problem of economic calculation. This theme is repeated again in Human Action. But assuming this establishes the theoretical possibility of economic calculation under socialism commits two fundamental errors: (1) misplaced concreteness, and (2) disregard for the social institutions that are required for economic calculation.

Those looking for a big laugh can find one in Philip Kotler's Huffington Post article entitled Fix Capitalism - Join Us!Kotler says "The economic system is failing to deliver rising living standards for most Americans. Most of the gains from higher productivity are going to the rich. The middle class is getting smaller, the wages of the working class are lower in real terms than in the 1980s, and the really poor continue to constitute 15% of our citizens."

Danny Finkelstein in the Times says game theory is often too complicated to solve real world problems. He's right, if you try to use it to get precise solutions. But it has another use. It reminds us that there are (at least) three paradigms in economics and it matters enormously that we know which paradigm is relevant for which problem*.
One paradigm is parametric maximization: we maximize expected utility subject to given parameters.

OTTAWA — NDP brass are taking a second shot at jettisoning some of the socialist baggage that many — including Leader Tom Mulcair — feel might hold them back in the next federal election.
A committee of senior NDP members is recommending the party modernize its guiding statement by making it less ideological and dropping most of its many references to socialism.
A proposed rewrite of the opening lines of the NDP constitution was sent to party members Wednesday, in advance of next week’s policy convention in Montreal.